For years, Lou Pearlman wowed banks and investors with slick talk and a lavish lifestyle. But when the one-time architect of the Backstreet Boys and 'N Sync set his hand on a courtroom Bible, he set the act aside.
Pearlman pleaded guilty Thursday to federal charges of conspiracy, money laundering and making false statements during a bankruptcy proceeding. The plea was the result of a lengthy federal probe alleging he bilked investors and banks out of more than $300 million.
Pearlman's Transcontinental Airlines Inc. didn't have 41 airplanes, as he represented to investors. He had two, he said in court.
And he didn't have a German investment partner with a $50 million line of bailout capital, he acknowledged. In fact, that guy was also trying to get money out of him.
"I'm accepting full responsibility," Pearlman said in a roughly 50-minute change of plea hearing.
He will be sentenced May 21, and faces up to 25 years in prison and a $1 million fine.
Pearlman also pledged to help prosecutors locate coconspirators and any remaining assets, but couldn't explain to U.S. District Judge G. Kendall Sharp where the money went.
Pearlman acknowledged setting up a fake accounting firm to create business documents and tax returns for himself and his companies. He also admitted using the signature of a deceased former associate, Harry Milner, to push off anyone seeking repayment. Milner hadn't worked with Pearlman since 1989, the mogul acknowledged, and died in 2003.
Pearlman defrauded individual investors in two ways: by selling "stock" in largely asset-less companies for more than 20 years, even after at least one lost its incorporation.
He also invited outsiders to pay into an employee investment savings program. It promised high yields, but operated like a typical Ponzi scheme. All the money was funneled into one account that Pearlman used to bankroll other ventures.